At first.. on the second and third phases - when the values decoded, converted, validated, and applied - your select processed also because you doesn't limits ajax processing to the link ony. (You may achieve this via wrapping the link to the region or ajaxSingle=true definition.).
2) move modal panel out of your form. If you need to submit something from the Modal - it should have its own form inside.
3) use event = oncomplete. after you'll done 1) and 2) - should works fine.
Thanks a lot!